Sims v. Moser
| Decision Date | 22 May 2008 |
| Docket Number | No. 07-1200.,07-1200. |
| Parties | Micheal Dewayne SIMS; Bob Bomar; Geraldine Reshel; Kenneth Way; Nathan Hutson Way; Humnoke Farms, Inc., Appellants, v. Keith MOSER; Jewell, Moser, Fletcher & Holleman, P.A.; JMF Enterprises, Inc., Appellees Scott Fletcher & Barry Jewell, Appellees/Cross-Appellants. John T. Holleman; Holleman & Associates, P.A., Intervenors/Appellees. |
| Court | Arkansas Supreme Court |
Newland & Associates, PLLC, by: Joeal F. Hoover and Elizabeth C. Abney, Little Rock, for appellant Micheal Dewayne Sims.
Timothy O. Dudley, Little Rock, for appellant Bob Bomar.
Dover Dixon Horne, PLLC, by: Thomas S. Stone and Nona M. Robinson, Little Rock, for appellant Geraldine Reshel.
Stuart Law Firm, P.A., by: Ginger Stuart Schafer and J. Michael Stuart, Lonoke, for appellants Kenneth Way, Nathan Hutson Way, and Humnoke Farms, Inc.
Jack, Nelson, Jones, Fink, Jiles & Gregory, P.A., by: John W. Fink, Little Rock, for appellee/cross-appellant Barry Jewell.
Watts, Donovan & Tilley, P.A., by: David M. Donovan, Little Rock, for appellee/cross-appellee Scott Fletcher.
Edward T. Oglesby, Little Rock, for intervenors/appellees Holleman & Associates, P.A. and John T. Holleman.
This appeal stems from a proceeding for judicial dissolution of the law firm of Jewell, Moser, Fletcher & Holleman, P.A. (JMFH). Appellants Micheal Dewayne Sims, Bob Bomar, Geraldine Reshel, Kenneth Way, Nathan Hutson Way, and Humnoke Farms, Inc., filed claims in the dissolution proceedings as alleged creditors of appellees JMFH, Keith Moser, Scott Fletcher, Barry Jewell, JMF Enterprises, Inc., and intervenors John T. Holleman and Holleman & Associates, P.A. Appellants raise issues on appeal both collectively and individually. Several appellants argue on appeal that the circuit court (1) deprived them of due process by summarily denying their claims as creditors without notice or a hearing; (2) exceeded its jurisdiction by denying their claims after they had been approved by the court-appointed receiver; (3) erred in failing to issue specific findings of fact and conclusions of law as requested by appellants pursuant to Ark. R. Civ. P. 52(a); and (4) erred in denying appellants' motions to intervene because they were entitled to intervention as a matter of right pursuant to Ark. R. Civ. P. 24(a). Appellants Sims and Reshel each present additional arguments on appeal regarding their individual claims. Cross-appellant Scott Fletcher argues on appeal that the circuit court (1) erred in refusing to award him prejudgment interest on his counterclaim judgment against Jewell, and (2) should have treated him as a creditor of JMFH by virtue of the stock redemption agreement as opposed to a shareholder. Cross-appellant Barry Jewell argues that the circuit court erred by denying his motion to stay the counterclaim against him after he notified the court that he intended to invoke his Fifth Amendment right against self-incrimination. We affirm in part and reverse and remand in part on direct appeal. We affirm on cross-appeal.
The record reveals the following facts. On June 19, 2003, Jewell, a shareholder in JMFH, filed an action in the Pulaski County Circuit Court seeking judicial dissolution and accounting to dissolve JMFH. Jewell alleged that the members of the firm stopped practicing law together on or about August 31, 2002, but continued to collect receivables owed to the firm. Fletcher, also a shareholder of JMFH at one time, responded by filing a counterclaim against Jewell, asserting causes of action for breach of contract, unjust enrichment, breach of fiduciary duty, defamation, intentional destruction of property fraud, and negligence. Moser, a third shareholder of JMFH, responded by filing a motion to dismiss Jewell's complaint pursuant to Ark. R. Civ. P. 12(b)(6). Jewell amended his complaint on September 5, 2003, requesting the circuit court to appoint a receiver and, in response to Fletcher's counterclaim and Moser's motion to dismiss, subsequently filed a motion for summary judgment asserting that Moser had lost his license to practice law and was no longer a shareholder in JMFH, that Fletcher was also no longer a shareholder, and, thus, neither party had standing to challenge the dissolution.
After a hearing, the circuit court granted summary judgment on September 22, 2004, as to the dissolution of JMFH. In a separate hearing, the court appointed Milas "Butch" Hale to serve as the receiver for JMFH pursuant to Ark.Code Ann. § 4-27-1432 (Repl.2001). The fourth shareholder of JMFH, Holleman, also argued that he should be allowed to intervene because he held certain funds that JMFH had an equitable interest in and also held a creditor's claim as an employee of JMFH for salaries and benefits owed to him. The circuit court delayed its ruling, but eventually granted Holleman's motion to intervene on November 5, 2004. Holleman then filed his complaint in intervention. While several of the appellants also sought to intervene to assert claims against JMFH, the circuit court determined the appellants' interests would be adequately protected and that it was not appropriate for creditors to intervene in a judicial-dissolution proceeding.
On May 27, 2005, the circuit court held a hearing at which the receiver advised the court that he had established a claims procedure as requested and that the time for filing claims would expire in June of 2005. The court stated that there would be a full day set for any claim contests that might arise so that testimony and evidence could be admitted. As the dissolution proceedings continued, the circuit court held another hearing on November 8, 2005, to begin adjudicating claims and taking testimony on what assets belonged to the firm, as opposed to individual shareholders.
At the November 8 hearing, the receiver presented the court with a list of claims filed to date and recommended that the claims be paid. The circuit court announced that as long as claims had been filed within the time period established by the receiver, it would allow creditors to amend or supplement their claims if needed. The court then proceeded to hear testimony and take evidence with regard to what assets belonged to JMFH and what assets belonged to certain individuals, including whether certain fees collected by Holleman after the dissolution proceeding began were fees that belonged to JMFH or to Holleman and Holleman & Associates. Additionally, the circuit court ordered Holleman to turn over trust records to the receiver regarding the fees in the case of Betty Hoyt.
At the conclusion of the hearing, the court instructed the parties, including the creditors, to submit simultaneous briefs within two weeks on the issues of what assets belong to JMFH and whether, under the receivership statutes, the shareholders had any standing to object to the receiver's recommendation regarding what claims should be accepted. With regard to the creditors, the circuit court stated:
Well, let me just say this: What we're going to do, since this is a little bit of an unusual proceeding, is I am going to make sure to the best of my ability that each of your respective clients feels like they had their day in court fully and completely and try my best to make an informed decision on that.
Following questions about possible objections to individual creditor's claims, the circuit court further stated:
Well, we're not done with the claimants yet because you all haven't had a chance, either in the venues that you're in or here, so all issues are on the table with respect to your individual claims. I haven't made any decisions and didn't take any testimony or evidence with respect to that, so that's being passed.
The circuit court then entered an order on December 29, 2005, without further proceedings, in which it found that the effective date of the dissolution of JMFH was July 25, 2002. The order also instructed Jewell, Moser, Fletcher, and Holleman to each pay certain monies into the court registry that had been recovered on behalf of JMFH, and to file with the court an itemized accounting of all JMFH fees and costs since July 26, 2002. Monies in the registries of Faulkner County and White County were found to be assets of JMFH. The order further denied the request to prioritize claims.
In addition, the circuit court ruled that appellant Sims's claims were only supported by the final judgment of the Lonoke County Circuit Court which was void ab initio with respect to JMFH because while normally circuit courts of the State of Arkansas are courts of concurrent jurisdiction, the Arkansas Legislature had specifically provided that a court conducting a judicial dissolution and appointing a receiver had exclusive jurisdiction over a corporation. Accordingly, the circuit court found that the Lonoke County Circuit Court was divested of jurisdiction over JMFH upon the filing of the complaint for judicial dissolution. Sims was given thirty days from the date of the order to file and tender to the appointed receiver any and all documents he believed supported his claim against JMFH. All other individual claimants were also given thirty days to file documentary evidence in support of their claims.
The circuit court also allowed Holleman several claims and, finally, declared Jewell, Fletcher, Moser, and Holleman to each be a twenty-five percent stockholder in JMFH. Pursuant to that finding, each stockholder was entitled to one-fourth of any of the firm's remaining property.
Following the submission of several motions and amended claims, the circuit court entered an order allowing certain claims sought by Jewell, Fletcher, and Holleman, as well as a claim by creditor Betty Hoyt. All other appellants' claims were summarily denied.
On February 14, 2006, the appellants collectively filed a motion for reconsideration or new trial, or, alternatively, for a stay of the circuit court...
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